The Competition Commission of India has issued an order on August 25, 2014 regarding trade practices of select OEMs covering aspects including procurement and sale of spare parts from component manufacturers and after sales service.
Commenting on the order, Vinnie Mehta, Director General ACMA said, “The aftermarket in India is fast growing and with increased technical complexity of vehicles, the players in the market need to be endowed with skills, technical tools and high quality genuine parts that will help them service their customers appropriately. As the vehicle parc in the country grows, it is critical to create an open market which is in the best interest of the end consumer. Similar such regulatory frameworks have also been established in Europe and certain states in the USA. Further, the aftermarket in India is plagued with counterfeit and spurious components; allowing larger number of organized players in the market will not only improve the product offering but will also enrich the customer experience of vehicle ownership, thus positively impacting the overall image of the automotive industry.”
Some of the salient points of the order are highlighted below:
- OEMs to put in place an effective system to make spare parts and diagnostic tools easily available through an efficient network.
- OEMs to allow Component Manufacturers (OESs) to sell spare parts in the open market without any restriction, including on prices. OESs to be allowed to sell the spare parts under their own brand name, if they so wish. Where the OEMs hold intellectual property rights on some parts, they may charge royalty/fees through appropriate contracts ensuring that they are not in violation of the Competition Act, 2002.
- OEMs to place no restrictions or impediments on the operation of independent repairers/garages.
- OEMs may develop and operate appropriate systems for training of independent repairer/garages, and also facilitate easy availability of diagnostic tools. Appropriate arrangements may also be considered for providing technical support and training certificates on payment basis.
- OEMs may also work for standardization of an increasing number of parts in such a manner that they can be used across different brands, like tyres, batteries etc. at present, which would result in reduction of prices and also give more choice to consumers as well as repairers/service providers.
- OEMS not to impose a blanket condition that warranties would be cancelled if the consumer avails of services of any independent repairer. While necessary safeguards may be put in place from safety and liability point of view, OEMS may cancel the warranty only to the extent that damage has been caused because of faulty repair work outside their authorized network and circumstances clearly justify such action.
- OEMs to make available in public domain, and also host on their websites, information regarding the spare parts, their MRPs, arrangements for availability over the counter, and details of matching quality alternatives, maintenance costs, provisions regarding warranty including those mentioned above, and any such other information which may be relevant for full exercise of consumer choice and facilitate fair competition in the market.
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